Fewer new homes were sold in December than the month before—but it’s not something that those looking for the home of their dreams should be too worried about.
There was a 9.3% monthly drop in newly constructed home sales, totaling 625,000 in December, according to a joint report by the U.S. Census Bureau and U.S. Department of Housing and Urban Development. December sales were up 14.1% year over year.
(Realtor.com® looked only at the seasonally adjusted numbers in the report. These have been smoothed out over 12 months to account for seasonal fluctuations in the market.)
The monthly decline is thanks to a blockbuster November. Because of the shortage of homes on the market, buyers who couldn’t find their perfect abode in summer, when buying typically peaks, extended their searches and finally closed in the fall. So fewer home shoppers were out during the holidays.
“Sales were unusually high in the previous two months, which means that sales dropped in December because people had [already] bought their homes,” says Joseph Kirchner, senior economist at realtor.com.
The most sales were in the South, at 331,000, and they were down 9.8% from November. They were up, however, 15.7% from the previous December.
That region was followed by the West, at 190,000. They were down 9.5% month over month, but up 18.8% year over year. In the Midwest, there were 63,000 sales, down 10% monthly and showing a 3.1% annual drop. There were only 41,000 sales in the Northeast. They were down 2.4% from November, but up 10.8% from the previous year.
Nationally, the median price of a new home was $335,400 in December, according to the report. That’s up nearly 0.15% from November and almost 2.6% over the previous year. And it was nearly 35.9% higher than the $246,800 median price tag of an existing home, according to data from the National Association of Realtors®.
“Affordability continues to be a problem,” Kirchner says. “In general, new home construction is focused on more expensive homes.”
That’s because builders are contending with construction labor shortages, rising land and materials costs, regulatory delays, and difficulties obtaining financing.
Just 4% of the new homes sold in December were $150,000 or under. An additional 13% were between $150,000 and $199,999. The bulk of the sales, about 47%, were of residences costing $200,000 to $399,999. About 11% of homes sold went for $400,000 to $499,999. New homes costing $500,000 and up made up the second-largest chunk of sales, at 25%.